Exports all-time high; passenger vehicle segment up: M&M

Arun Malhotra, senior vice-president - sales & customer care, automotive division, M&M, says that the company's domestic sales have grown by 20% and there has been 27% growth in passenger vehicles segment. He also say that in the last four months the company has no shut down or slow production and they are working at full capacity.

He also says that the company has a strong product portfolio in passenger vehicle segment; however there is a 3% decline in three-wheeler segment. He also says that the company had all-time high sales in exports. Below is the edited transcript of his interview to CNBC-TV18. Q: The signs of slowdown down don't seem to be hitting you'll at this point?
A: We have been fortunate enough. The sector growth is 22%, our domestic sales have grown by 20% and passenger vehicles segment has grown by 27%. In at it’s a good performance. Q: How would it compare with the previous month?
A: We are 12% higher compared to June 2012, but it would not be a fair comparison because our plant was shut down in June for 4-5 days. In the last four months we did not have any shut down or slowing down of production; we are working and producing on full capacity. Q: Analyst believes that the beat that you'll have delivered this time has come primarily from passenger vehicles and higher exports. Are both looking sustainable at this point?
A: With Scorpio, Bolero, Xylo and XUV 500, now we have a very strong portfolio. The sale of XUV 500 is not impacting Scorpio numbers. We have received a good response for the newly re-launched Verito. All the five products in the passenger segment are doing well. Our four wheeler passenger load commercial has also done well. However, we have been unable to keep up the trend in three-wheeler segment and posted a 3% decline. Q: You have de-grown by 5% in three wheeler segment on y-o-y basis, what's the outlook looking on that? Is it a seasonal effect or do you expect it to improve?
A: Three wheelers segment is largely dependent on local permits, local clearances and other variables. On that account, the entire industry is impacted. However, we have gained a market share in the three wheeler segment but that has not helped our volumes. In the last four months the three-wheeler segment has done poorly. Q: Bajaj Auto pointed out that we will see a pick up in permits later in the year. Do you agree with the view?
A: A lot depends on permits and financing; in this segment there are limited player who finance the segment. However, if permit picks up then that will definitely help the sector. Q: How have the numbers looked in the export segment?
A: With sales of 4,260, this time we had an all-time high in exports.
Q: How do you see consumption as a theme? We have repeated worries that consumption is slowing down very seriously. Are you noticing the same trend?
A: The sentiments are not good. If one is able to penetrate newer markets or new customer segments and you have a varying portfolio then one can buck the trend. The interest rates are very high at the moment and there is an urgent need for them to come down. The current financing rates are 11.75% from nationalized bank. They were 2-2.5 times higher than what they were 15-18 months back. So I think that's an urgent need on that counter. Q: How do you expect margins to pan out? Are you getting any elbowroom in terms of commodity prices or do you think that trough is over and now if anything you may have to push up prices?
A: We had two price increases. In our personal range of products we had a price increase in last April and in three wheelers pickups segment we did increase in first week of July. In spite of international softening of commodity prices, since they are linked to the dollar one don’t get any benefit out of it.
Otherwise, ideally if the dollar had remained constant with the rupee, there would have been a very positive impact in terms of margins in the vehicles pass it onto customers. Q: Are price hikes on the anvil?
A: Our last price hike was on May 1 and in commercial products which is the three wheelers and small four wheelers we have increased on July 1, so nothing around the corner at the moment. Q: There is some concern that over the next few months we have many SUV launches. Do you see competition weighing on volumes? Are you formulating any new strategy to counter it?
A: Competition is already there and it is increasing in some parts, we are seeing a strong pull in our core products. We are aggressively working for deeper penetration in newer segments.